EUR/USD pausing Decline, Nikkei May Echo S&P500 Fall as Yen gains

Technical Analysis

The GBP was undoubtedly the best performing major on Thursday (04.10.2018) and it was aided by a number of developments during European Session. There had been a rally in the UK government bond yields and the USD was experiencing a corrective downfall after “6 consecutive day persistent gains”. GBP also received a boost from a new Irish border proposal that happened to be a major even in contrast to a possible Brexit deal.

Quite a few currencies including Japanese yen and Swiss Franc also had seen corrective gains. The S&P500 has suffered its largest loss (-0.82%) since June 27th and equities were under pressure, as the global credit conditioning was tightening and US government bonds were reaching multiyear highs. It was unfortunate but inevitable for AUD and NZD to experience further losses and future losses are also anticipated as US-China trade war still is looming large.

As S&P500 was declining and DXY was blooming in the last few days, a similar pattern might have been raised in contrast to Nikkei, as Japanese Yen started to show a little bit of resistance, though it might have the bias of the surrounding, rather than a result of BoJ monetary policy or market improvement.

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As USD stopped further gains and started a downward movement (currently residing at 95.31), EUR/USD pauses further losses. EURO started Thursday market in the 1.1450s and there was a risk looming large that it might experience a yearly low at 1.1320. Yet, right now EUR is being traded at 1.1506 and the declining has been paused for a while. However, the chance of further loss has not been averted, as there was no significant improvement over the Italian Budget Concerns.

EUR/USD daily chart

To the bottom lines

Right now, it seems that Nikkei 225 might not be able to avert a downward momentum, as Yen has stopped falling for now following the same pattern as S&P500 did during the USD rallying. Further gain of EUR is completely depended upon the political turmoil over Italy and EUR will follow an upwind move as soon as the political risk is averted.

The British pound might be rallying for the next couple of days, as Brexit deal is ongoing and an important Irish border proposal is on the edge of being accepted. US government Bond price is too high decreasing appeal and may give rise to more decline in US Dollar in association with dovish FED decision.

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